106. Telegram From the Embassy in Thailand
to the Department of State1

I made presentation to Prime Minister this afternoon following
closely reftel A. PriMin was accompanied by FonMinThanat and Minister in Prime
Minister’s office General Sawaeng. I was accompanied by political and economic
counselors.

2.

In my presentation, I laid particular stress on: a) joint interest
of our two governments in Indonesia’s economic and financial
stability. This importantly furthered by IGGI efforts, in context of which U.S. PL–480 and other assistance provided.
b) Opportunity for additional commercial sales which may be
presented if GOI decides to forgo
50,000 tons of PL–480 rice in
favor of other PL–480 commodities;
and c) Evidence that our activity has not been disruptive of
commercial opportunities provided by fact that 400,000 tons of rice
commercially imported by Indonesia in their FY 1969–70 (almost double the 1965–66 total).

3.

Thai side argued extensively with all three of these points, with
Thanat carrying the
attack.

4.

PriMin did not argue against aid
to Indonesia, but made one point in this respect which he held to
politely but persistently—the U.S. should aid Indonesia, but with
commodities other than rice or with cash. He said that the amount of
money involved in 400,000 tons rice sale meant little to the U.S.,
but was fundamentally important to Thailand.

5.

Thanat, nominally acting as
interpreter but in fact presenting most of the argumentation
himself, said “the IGGI has nothing
to do with U.S. Simply because it is a member of IGGI, the United States cannot
arrogate to itself the right to take actions seriously detrimental
to this country.” He said Thailand is trying hard to stand on its
own feet, as Marshall Green in
a recent speech was quoted as saying they should do. Then he added
their ability to do so is seriously affected when the United States
unfairly disrupts its markets for its principal export, rice.

6.

I said that the U.S. had not disrupted Thailand’s market, but
that our actions had greatly helped Indonesia, a country badly
in need.

Like Thailand, Indonesia was a very important country in
Southeast Asia, its security, stability and financial health was
very important to the area, including to Thailand, as well as to
the U.S. Therefore we were working with others to try to restore
Indonesia’s economic health, at the same time minimizing the ill
effects on the export markets of others. I said the fact that
Indonesia’s commercial imports were up showed both that the
program was in fact contributing to the health of the Indonesian
economy and that our program had not interfered with commercial
markets. (Thanat picked
this point up somewhat later.)

7.

A second point stressed by PM was
that if we had to use rice as a commodity in aid program for
Indonesia, we should do as Japan did, i.e., buy some of the rice in
Thailand to give to Indonesia. Thanat added that Japan had much larger rice stocks
than the U.S., yet found it possible to take account of the interest
of countries such as Thailand and to forestall the ill effects of
its “politically motivated” sales.

8.

I said I was happy that the Japanese had been able to take this
action. I said that in making comparisons with this action and that
of the U.S., however, we must remember that Thailand’s heavy trade
imbalance with Japan, which was not offset in any other way,
contributed importantly to Thailand’s balance of payments problems.
By contrast, the total effect of U.S. activities and direct
assistance made an important positive contribution to Thailand’s
overall balance of payments. Thus I could understand why the
Japanese would be especially concerned to compensate at least in
some small measure for the overall effect of their role.

9.

Thanat then said that if we
are going to compare Japan and the U.S., we must remember that
Thailand is not extending the same cooperation to Japan and opening
the same facilities to Japan that it is to the U.S. He said the Thai
contribution to the security of this area and to U.S. interests in
particular was persistently overlooked by some in Washington. I said
I did not in the least minimize the Thai contribution, but that if
we were going to look at the matter in the perspective he had
suggested we should also round out the picture and recall the
enormous expenditures which the U.S. had made and the enormous role
it had played in other respects in Southeast Asia to contribute to
the security of the countries of the area.

10.

On the question of the commercial opportunity being open to
Thailand, Thanat was
thoroughly scornful of the 600,000 ton figure originally requested
by the Indonesians (“Only a bargaining figure”; “They may just as
well have asked for a million tons”). He was equally scornful of the
possibility of a further 50,000 ton increase from the 400,000 ton
planning figure. He said that 50,000 tons of rice was “an almost
ridiculous amount,” and said that if we were to say we were cutting
that 350,000 tons had already been shipped or was in the late [Page 222]stages of preparation for
shipping and therefore the 50,000 tons were all that could be cut
from the program. He said (referring to the Vietnamese case of last
year) that “ships can be diverted”. He asked “What makes you think
they will buy the 50,000 ton balance from us anyway?” I replied that
they have been pressing us for more rice, and that we will be
supplying other kinds of needs if they decide to forgo the rice
which should free the necessary foreign exchange. Thus the
possibility seemed good.

11.

Picking up my point about the 400,000 tons of commercial sales in
FY 69–70, he denied that
Indonesia had purchased that much, saying he did not question that I
had been told that, but that I had been “misled” by Washington. He
said in any case it was “specious reasoning” to say that commercial
imports of rice had gone up as the result of our PL–480 sales. I responded firmly that
I had not argued that, but had said that the total effect of our
activities, including the PL–480
sales, had obviously not been disruptive when commercial purchases
by Indonesia were double the 1965–66 level. I said we thus saw no
evidence that our activities had been disruptive. He said if we
would stop our sales we would see immediately how disruptive they
had been because Thai export sales would immediately rise. I
responded by raising again the question of why Thailand had not
obtained more of the rising commercial purchases Indonesia was
making. Thanat then challenged
me saying did I mean to say that PL–480 has not disrupted normal commercial sales: what
about sales which Thailand in the past has been on the point of
making which were cancelled at the last minute because of this
program. I said I was addressing the present case of
Indonesia.

12.

Thanat again spoke of
“intrusion into a perfectly normal market”. I asked why Germany and
others couldn’t just as well use such an argument to prove that we
were “interfering” with their market in Thailand for equipment,
weapons, etc. He simply said that was up to the Germans to raise
with us. He said it was up to us to prove we were not causing
disruption, not the other way around. He said everyone in Thailand,
including the people on the streets, knew that disruption was being
caused. I said these people were of course guided by what they were
being told by the newspapers and others. I said I knew there was a
problem, but the question was why. In the face of the large
Indonesian commercial imports in the past year, I was still
uncertain why Thailand did not get more of that market. Thanat again took the position that
our figures were simply wrong.

13.

I said our actions have shown that we do mean to work closely with
the Thais to avoid damaging their interests. I said the USG has many commitments, including to
Indonesia, but we attempted to discharge them without disrupting the
markets of others. I recalled again the two reductions already made
in the figure for PL–480 rice for
Indonesia, and that we were now proposing another.

14.

Thanat denied that we had
taken their interests into account. He said we had not really
consulted them, but simply presented them with faits accomplis. He
said Ambassador Sunthorn has
been treated with “arrogance” in his talks on this subject in
Washington. I said I was very surprised to hear him say that,
pointing out I had seen no reflection of it in my talks in
Washington.

15.

Thanat then said the U.S. does
not raise rice for consumption but only to dump on the markets of
the world, and asked why we don’t do something about production. I
pointed out that we had increased rice production to meet a grave
world shortage starting in 1965, and that we had thereby saved many
people from starvation. We recognized that the supply situation had
changed and we had cut back acreage in the past two years, but such
an adjustment takes time. He said I was “evading” the U.S. domestic
political element. I said of course that element was there, but it
was there largely because of the investments American farmers had
made to gear up production where it was needed. He said the American
economy could adjust more quickly than it was doing.

16.

At the end I agreed to report the views I had heard to Washington
and again urged them to be prepared to follow up on the commercial
opportunity that might open. This earned a scornful “thanks” from
Thanat.

17.

Comment: While Thanat carried the ball and did most of the talking,
Thanom obviously agreed
with him on at least a couple of basic points, i.e., that Thailand
is being hurt, and that they got previous little from us in response
to his appeal through SecDef.

18.

It is worth noting in particular that to reinforce one point about
PL–480 rice sales Thanat cited (and obviously
endorsed) a highly critical Malaysian comment about our rubber
disposal program.

19.

We are withholding any press release or comment until we see how
RTG plays that aspect but are
preparing for a substantial effort to get our side of story told if
they go on the offensive again.